BETHESDA, Md., Jan. 21, 2015 /PRNewswire/ -- With tension
between economic improvements in the U.S. and shakier economies in
Asia and Europe, uncertainty over corporate earnings
continues but is levelling off, according to corporate treasury and
finance executives surveyed in a report released today by the
Association for Financial Professionals (AFP).
The 2015 AFP Risk Survey, produced in conjunction with global
management consulting firm Oliver Wyman, part of Marsh &
McLennan Companies, found that 43 percent of U.S. corporations are
experiencing higher levels of earnings uncertainty as compared to
three years ago down from 45 percent last year and 59 percent
two years ago. Nevertheless, a full 86 percent of respondents see
the same or higher levels of earnings uncertainty, about the same
as last year's results, suggesting that earnings uncertainty has
become the new normal.
Finance professionals say top drivers of uncertainty are
concerns about business/operations (cited by 25 percent of
respondents), financial factors (24 percent), external factors (20
percent), and macroeconomic factors (20 percent). Amid changing oil
prices, 11 percent of respondents point to commodities as
contributing factor, up from seven percent a year ago.
Looking ahead, 44 percent of finance pros rank
political/regulatory uncertainty as their biggest risk to corporate
earnings in the next three years, down from 48 percent last year.
They also cite tougher competition and customer
satisfaction/retention among top 3 risks on the horizon.
In response to these threats finance professionals report their
companies are adjusting product lines or offerings (69 percent) or
extending or creating new supply chain partnerships (62 percent).
More than half are increasing capital expenditures, expanding their
workforces and re-prioritizing their geographic markets (each cited
by 59 percent of respondents).
"The survey results show that as companies are becoming more
attuned to the uncertainty in the business environment, they are
identifying opportunities to invest in their businesses," said
Alex Wittenberg, Partner,
Oliver Wyman and Executive Director,
Marsh & McLennan Companies Global Risk Center. "Whether
expanding product lines, hiring new talent or concentrating on
high-growth geographies, the goal is to be more competitive and
more resilient, and it is information gleaned from risk analyses
that companies are using to shape their decisions."
CYBERATTACKS
This year's survey also focused on cyberattacks. According to 45
percent of survey respondents, the most severe likely impact
resulting from a cyberattack is damage to the company's
reputation. Indeed, 51 percent of finance pros from companies
that have suffered breaches cite reputational damage as the most
severe result. Financial liability, revenue loss, regulatory
investigations and fines also were cited as potential
consequences.
For protection, companies are moving to technical solutions (71
percent), such as levels of systems approvals, authentication
procedures, and access controls. Fewer companies (62 percent) are
implementing better training for staff. A significant vulnerability
is in corporate treasury departments, where 60 percent say they
have no clearly documented mechanism in place to initiate a
response to a cyberattack.
"When it comes to cyberattacks, it's a question of when, not
if," said Jim Kaitz, AFP's president
and CEO. "Treasurers and CFOs need to move beyond technology. To
protect their companies, they must also change the corporate
culture."
ABOUT THE SURVEY
In October
2014, AFP surveyed its senior level corporate practitioner
membership and prospects with job titles of CFO, treasurer,
controller, vice president of finance and assistant treasurer about
uncertainty and the way their organizations manage risk, receiving
509 responses. This is the fourth survey in the risk series
undertaken by AFP and Oliver Wyman .
Download complete findings on www.afponline.org/risksurvey
ABOUT OLIVER WYMAN
With
offices in 50+ cities across 25 countries, Oliver Wyman is global leader in management
consulting that combines deep industry knowledge with specialized
expertise in strategy, operations, risk management, and
organization transformation. Oliver
Wyman is a wholly owned subsidiary of Marsh & McLennan
Companies [NYSE: MMC]. Follow Oliver
Wyman on Twitter @OliverWyman.
Marsh & McLennan Companies' Global Risk Center generates
insights and explores solutions for addressing major threats facing
industries, governments, and societies. The Center aims to
highlight critical challenges and bring together leaders from
different sectors to stimulate new thinking and practices.
ABOUT AFP®
Headquartered outside Washington,
D.C., the Association for Financial Professionals (AFP) is
the professional society that represents finance executives
globally. AFP established and administers the Certified Treasury
Professional and Certified Corporate FP&A Professional
credentials, which set standards of excellence in finance. The
quarterly AFP Corporate Cash Indicators serve as a bellwether of
economic growth. The AFP Annual Conference is the largest
networking event for corporate finance professionals in the
world.
AFP, Association for Financial Professionals, Certified
Treasury Professional, and Certified Corporate Financial Planning
& Analysis Professional are registered trademarks of the
Association for Financial Professionals.© 2015 Association for
Financial Professionals, Inc. All Rights Reserved.
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SOURCE Association for Financial Professionals